What Does “Instant Issue” Really Mean?

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In late 2001, humanity was eagerly awaiting the unveiling of a technology so trailblazing that it would change the world forever. Apple co-founder Steve Jobs asserted that future cities would be designed around it, Amazon’s Jeff Bezos called the technology “revolutionary” and invested in its development, and others predicted it would entirely eliminate our dependence on foreign oil. The anticipation of its release became so intense that the product had the most hyped launch since Apple’s Macintosh computer.

It was the Segway Scooter.

The surety industry is currently experiencing its own Segway moment in the form of instant-issue bonds. Brokers galore will boast about their ability to instant issue thousands of bonds when in reality, all they are doing is auto-filling PDFs for bonds with no underwriting criteria.

In this article, we break down what “instant issue” really means and provide insights on the underwriting capabilities agents should actually care about.

The Cold Hard Truth

Instant issue is a loosely used term to describe surety bonds not subject to any underwriting requirements and are able to be issued to all applicants at the same price regardless of factors such as credit, business experience, etc. These bonds are so low risk that carriers do not need to attach any underwriting processes.

On these bonds, brokers collect your customer’s information by having them fill out an application and then transfer that information to the bond form. That is the entire process for writing an instant issue bond. There’s no innovative technology involved, and no expert-level skills required.

In short, instant issue = auto-filling PDFs for low-risk bonds without underwriting requirements.

What Really Matters

Any broker with a Wix or Squarespace account can provide you with instant-issue bonds. However, very few surety bond providers can automate credit and financial underwriting, let alone incorporate other criteria such as information from obligee databases and direct APIs to business accounting software. While “instant issue” refers to a category of low-risk bonds not subject to underwriting, automated credit and financial underwriting can instantly issue higher-risk bonds that require a credit check before issuance.

For example, a broker without automatic credit and financial underwriting capabilities will have to manually run a credit check on your customer after they submit an application. This takes time and effort, leading to delays in issuing your customer’s bond. If that broker had automatic credit and financial underwriting, their system would automatically run a soft credit check on your customer and be able to provide them with a quote instantly.

The Bottom Line

There are hundreds of surety bonds with no underwriting criteria that are categorized as “instant issue.” Insurance agents can obtain these with relative ease from pretty much any provider. However, agents hoping to instantly receive quotes on harder-to-place risks should be on the lookout for providers with automated credit and financial underwriting capabilities.

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